Stem cells must maintain proliferation during tissue development, repair and homeostasis, yet avoid tumor formation. In Drosophila, neural stem cells (neuroblasts) maintain proliferation during embryonic and larval development and terminate cell cycle during metamorphosis. An important question for understanding how tissues are generated and maintained is: what regulates stem cell proliferation versus differentiation? We performed a genetic screen which identified nucleostemin 3 (ns3) as a gene required to maintain neuroblast proliferation. ns3 is evolutionarily conserved with yeast and human Lsg1, which encode putative GTPases and are essential for organism growth and viability. We found NS3 is cytoplasmic and it is required to retain the cell cycle repressor Prospero in neuroblast cytoplasm via a Ran-independent pathway. NS3 is also required for proper neuroblast cell polarity and asymmetric cell division. Structure-function analysis further shows that the GTP-binding domain and acidic domain are required for NS3 function in neuroblast proliferation. We conclude NS3 has novel roles in regulating neuroblast cell polarity and proliferation.